Why should you even offer employee benefits in your company?
Today’s “war for talents”, which is becoming increasingly intense due to the shortage of skilled workers, requires employers to pay more attention to the wishes of their (future) employees. Because if they don’t, they can soon have another Great Resignation on their hands, nor will they be able to get existing employees back to the office.
These wishes don’t only concern building a strong company culture, but also providing certain offers that make you stand out from your competitors as an employer. The goal is to establish a strong employer brand to guarantee the acquisition of new talents and improve employee retention.
Of course, employee benefits differ depending on the employer, and not only the size of the company affects what employee benefits are best. The available budget or the location of the company also plays a role in the selection of what benefits to offer to employees.
For example, if you are a Berlin start-up or have your young company based in another European city, this will certainly make a difference when it comes to choosing the right benefits. But when it’s located in the countryside, for example, your employees will have different demands and needs.
In this article, we discuss:
- What employee benefits are there?
- Costs of employee benefits for your business
- The best and most popular employee benefits: Past vs. present
Benefits are also an important part of the employee value proposition (EVP), which is a cornerstone of employer branding. We explain how to develop your employee value proposition in our blog article of the same name.
What employee benefits are there: Types and examples
Some benefits are usually listed at the end of your job advertisement and include what you as an employer can offer your employees as additional benefits.
Communicating these guaranteed benefits (i.e. those that are not negotiated) in the job advertisement is essential for your employer branding. How to create your job advertisement in the best way to reach top talents is explained in our dedicated guide:
But now back to the various company benefits you can offer your employees.
Generally speaking, employee benefits can be divided into different employee benefit types. Find out what they are and what they include:
1. Financial support and monetary contributions
- Premiums and bonuses
- Christmas, Ramadan, or other types of holiday pay
- Possible payment of estate agent costs in the event of a job-related move (relocation assistance)
- Financial allowances (e.g. cleaners, childcare, tutoring needs, care for family members)
- Company pension scheme
- Share and stock programmes
- Profit-sharing schemes
For example, one of our clients, Taxfix, provides its employees with monthly allowances for domestic support (for family care or household support, child or pet care, as well as tutoring needs).
2. Transport and mobility
- Public transport ticket
- Company car
- Funding for bicycle leasing
- Sustainable mobility budget (e.g. electric car-sharing services)
3. Physical and mental health
- Mental health programmes
- Gym memberships
- Ergonomic office equipment to support employees working from home
- In-office health care and sports facilities
- Quiet and prayer rooms
For example, our employees at JOIN have a monthly credit that they can invest in Urban Sports Club, Gymondo, or 7Mind.
4. Work-life balance
- Home office option
- “Work from anywhere”
- Free childcare
- Flexible working hours and the option of a 4-day week
- Extra holiday days
5. Training and development opportunities
- Work coaching
- Advice on financial issues
- Courses and training
- Language courses
6. Material gifts or discounts
- Material gifts
- Discounts for certain products or services
- Use of the own product
- Birthday present
- Work anniversary gifts
Our client Numa offers its employees the use of its own product as a benefit.
7. Lifestyle and culture
- Tickets for specific events
- Team events such as Christmas parties or summer barbecues
- Bringing dogs into the office
- Drinks and food in the company
8. Company-specific benefits
- Technical equipment: Company phone, laptop, and other accessories (headphones, mouse, keyboard)
- Location and accessibility of the company
- In-house canteen
- Relocation programmes for international employees and support with visa applications
- Leisure facilities at the workplace: Table football, game consoles, etc.
Costs of employee benefits for your business
In 2021, the average gross salary for men (in Germany) was €23.20 and for women €19.12 per hour. However, gross salary is not the only personnel cost a company pays.
Costs for benefits, special payments, and company pension schemes are also part of the personnel costs and accordingly increase the company costs.
A company’s staff benefits should always be calculable and of equal value to all employees. Offering benefits to selected employees and putting other employees at a financial disadvantage could create envy or affect employee satisfaction.
This would not only create an unclear financial risk, but also the risk of losing employees—and no company wants that nowadays.
Staff benefits for small, medium, and large companies
Depending on the size of the company, benefits can be implemented with varying ease. Larger companies or corporations not only have a larger human resources department but are also likely to have more financial resources to offer a comprehensive employee benefits package.
Larger companies with a higher number of employees could, for example, establish a 4-day model or other working time models more easily than smaller companies.
Smaller companies with flat hierarchies, on the other hand, find it easier to implement newer working methods or more flexibility in new-work concepts.
However, this classification does not exclude certain benefits for certain company sizes. The number of employees and the financial resources generally play a role in the selection of specific staff benefits.
How employee benefits can actually reduce staff costs
What benefits definitely do is promote employee retention. This in turn actually reduces personnel costs. So although offering benefits means spending money on the costs of implementation, they actually help companies save money in the end. That’s why it’s almost always beneficial for companies to offer employee benefits.
Of course, first and foremost, benefits are intended as an additional service for employees to support them in their personal and working life. However, they can also have a direct positive effect on companies. For example, team events can positively change communication within the company.
This all adds up to improved employee retention, which means the company can save on employee turnover costs. Considering that employee turnover (and hiring a new employee in return) is estimated to cost a company somewhere between once or twice a yearly salary shows the importance of good employee retention.
That’s why investing in measures to strengthen employee retention is worthwhile for companies, especially in the current struggle for qualified, skilled workers.
The best and most popular employee benefits: Past vs. present
What employees need and want from their employers has changed, especially in recent years due to the Corona pandemic. Home office is becoming the standard, flexible working hours a must-have, and the work itself must be meaningful.
Of course, the most popular and best employee benefits will differ per country, city, and industry. But in general there are common trends that can be identified. Below, we’ll take Germany as an example to see how the most popular employee benefits have changed over previous years.
In 2016, according to a Kununu study, the top 7 benefits that employees wanted were these:
- Flexible working hours
- Home office
- Dogs allowed
- Company car
- Company pension scheme
- Good transport connections
In 2022, according to a Stepstone study, employees now want these top 7 benefits:
- Hybrid working models
- More flexibility
- Individual benefits (for example, the active promotion of diversity)
- Employee wellbeing (well-being of employees)
- Own fitness studio and joint wellness weekend
- Green benefits (e.g. sustainable mobility)
- Time off for voluntary work
In 2022, anyone who still relies on free fruit or water will miss the opportunity that the targeted use of benefits offers to strengthen employee loyalty and employer branding.
Whether you run a small, medium-sized, or large company—offering the right benefits for employees may increase personnel costs at first glance, but it will also save turnover costs, which can be extremely high for qualified professionals.
The higher the position or the better trained or more experienced the person to be hired, the deeper the company has to dig into its pockets.
Want even more ways to show your employees you care? Then also check out our article 20 employee appreciation ideas to show them you care!